Halal Retailing: Closing the Last Mile in an End-To-End Halal Supply Chain

Retail today is complex, with retailers carrying thousands of different stock items, ranging from food (fresh and processed), home care items (e.g. fabric cleaners), personal care items, paper goods (e.g. toilet paper, pampers), kitchen accessories, magazines, and many more. These products are sourced locally, regionally and globally. As margins are relatively low in retailing, there has been a traditional focus on realising cost reductions in logistics through consolidation. Consolidation occurs as much as possible in transport, in sea containers, on air cargo pallets (and unit load devices), and in trucks in order to save logistical costs. Consolidation also means putting products together based on temperature requirements, not necessarily based on the halal status of a product. Mixing of halal and non-halal can therefore be an unfortunate consequence. Research shows that halal is moving from a product approach to a supply approach, where halal-exclusive and halal-segregated retail formulas will need to comply with halal logistics standards.

Although in the food category halal certification has been quite common, in the case of non-food items this is not the case. To classify a non-food product as non-halal is not as straight forward as identifying pork products and alcoholic beverages. Product composition needs to be assessed in detail, while for animal- based ingredients it is important to know what halal certificate lies behind them (this will address issues such as Halal Certification Body reputation, scope covered by the certification, standards applied, acceptance at destination, etc.). Furthermore, due to the issuing of new fatwas (like the recent fatwa in January 2019 by JAKIM, declaring cigarettes haram), certain products could suddenly be declared haram by the local halal authority.

A critical emerging requirement is the importance of consumer preference and the transparency of a brand owner’s halal eco-system—that is, the product ingredients and its processes. The consumer is seldom involved in the elaboration of standards and very rarely consulted on new developments appearing in the market. Also, consumers might not be aware of the scientific procedures behind halal certification, or the specific details of possible halal slaughtering procedures (the use or avoidance of stunning) while also lacking proper knowledge of the differences between madhahib. Halal certification remains by far the most trusted method for consumers to make their purchase decisions, and they largely leave the authorities of their respective countries to deal with the halal status of products.

For a halal retail standard to be successful it should have different classifications of halal retailers for both OIC and non-OIC countries in order to stimulate the availability of halal and minimise hardship for both the consumer and retailer. The halal retailing standard should be prescriptive instead of simply a management standard that leaves the design of halal retailing practices to the retailer, as is currently the case in Malaysia. A halal standard is recommended for halal-exclusive and halal-segregated retailers in both OIC and non-OIC countries. 

As retailers carry thousands of products, decisions on the ‘halal-ness’ of a product should be supported by the halal authorities. Leaving the decision to individuals undermines trust in a halal retailing system.

Retailers in OIC countries have to understand that they are closing the last mile in the end-to-end halal supply chain. This is a heavy responsibility that should be taken seriously. Halal retailing has consequences for sourcing, operations, and home delivery services. Halal-exclusive and halal-segregated are suitable models. A halal-mixed retail operation is not recommended in OIC countries, as it exposes the corporate reputation of both the halal-certified brand owner (supplier) and retailer.

For non-OIC countries, retailers should ensure availability of halal products. Halal authorities should protect and serve the Muslim community by advising retailers about developing halal categories. This will ensure that halal can go mainstream in non-OIC countries, improving the availability of halal products, which are currently limited to Muslim shops in big cities. Non-OIC countries can therefore practice all three models: halal-exclusive, halal-segregated, and halal-mixed retailer.

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